For many Americans, the financial crisis, and the recession it spawned,
have been devastating -- jobs, homes, savings lost. Understandably,
many people are calling for change. Yet change needs to be about
creating a system that works better, not just differently. As a nation,
our challenge is to design a system of financial oversight that will
embody the lessons of the past two years and provide a robust framework
for preventing future crises and the economic damage they cause.

These matters are complex, and Congress is still in the midst of
considering how best to reform financial regulation. I am concerned,
however, that a number of the legislative proposals being circulated
would significantly reduce the capacity of the Federal Reserve to
perform its core functions. Notably, some leading proposals in the
Senate would strip the Fed of all its bank regulatory powers. And a
House committee recently voted to repeal a 1978 provision that was
intended to protect monetary policy from short-term political
influence. These measures are very much out of step with the global
consensus on the appropriate role of central banks, and they would
seriously impair the prospects for economic and financial stability in
the United States. The Fed played a major part in arresting the crisis,
and we should be seeking to preserve, not degrade, the institution's
ability to foster financial stability and to promote economic recovery
without inflation.

The proposed measures are at least in part the product of public
anger over the financial crisis and the government's response,
particularly the rescues of some individual financial firms. The
government's actions to avoid financial collapse last fall -- as
distasteful and unfair as some undoubtedly were -- were unfortunately
necessary to prevent a global economic catastrophe that could have
rivaled the Great Depression in length and severity, with profound
consequences for our economy and society. (I know something about this,
having spent my career prior to public service studying these issues.)
My colleagues at the Federal Reserve and I were determined not to allow
that to happen.

Moreover, looking to the future, we strongly support measures --
including the development of a special bankruptcy regime for financial
firms whose disorderly failure would threaten the integrity of the
financial system -- to ensure that ad hoc interventions of the type we
were forced to use last fall never happen again. Adopting such a
resolution regime, together with tougher oversight of large, complex
financial firms, would make clear that no institution is "too big to
fail" -- while ensuring that the costs of failure are borne by owners,
managers, creditors and the financial services industry, not by
taxpayers.

The Federal Reserve, like other regulators around the world, did not
do all that it could have to constrain excessive risk-taking in the
financial sector in the period leading up to the crisis. We have
extensively reviewed our performance and moved aggressively to fix the
problems.

Working with other agencies, we have toughened our rules and
oversight. We will be requiring banks to hold more capital and
liquidity and to structure compensation packages in ways that limit
excessive risk-taking. We are taking more explicit account of risks to
the financial system as a whole.

We are also supplementing bank examination staffs with teams of
economists, financial market specialists and other experts. This
combination of expertise, a unique strength of the Fed, helped bring
credibility and clarity to the "stress tests" of the banking system
conducted in the spring. These tests were led by the Fed and marked a
turning point in public confidence in the banking system.

There is a strong case for a continued role for the Federal Reserve
in bank supervision. Because of our role in making monetary policy, the
Fed brings unparalleled economic and financial expertise to its
oversight of banks, as demonstrated by the success of the stress tests.

This expertise is essential for supervising highly complex financial
firms and for analyzing the interactions among key firms and markets.
Our supervision is also informed by the grass-roots perspective derived
from the Fed's unique regional structure and our experience in
supervising community banks. At the same time, our ability to make
effective monetary policy and to promote financial stability depends
vitally on the information, expertise and authorities we gain as bank
supervisors, as demonstrated in episodes such as the 1987 stock market
crash and the financial disruptions of Sept. 11, 2001, as well as by
the crisis of the past two years.

Of course, the ultimate goal of all our efforts is to restore and
sustain economic prosperity. To support economic growth, the Fed has
cut interest rates aggressively and provided further stimulus through
lending and asset-purchase programs. Our ability to take such actions
without engendering sharp increases in inflation depends heavily on our
credibility and independence from short-term political pressures. Many
studies have shown that countries whose central banks make monetary
policy independently of such political influence have better economic
performance, including lower inflation and interest rates.

Independent does not mean unaccountable. In its making of monetary
policy, the Fed is highly transparent, providing detailed minutes of
policy meetings and regular testimony before Congress, among other
information. Our financial statements are public and audited by an
outside accounting firm; we publish our balance sheet weekly; and we
provide monthly reports with extensive information on all the temporary
lending facilities developed during the crisis. Congress, through the
Government Accountability Office, can and does audit all parts of our
operations except for the monetary policy deliberations and actions
covered by the 1978 exemption. The general repeal of that exemption
would serve only to increase the perceived influence of Congress on
monetary policy decisions, which would undermine the confidence the
public and the markets have in the Fed to act in the long-term economic
interest of the nation.

We have come a long way in our battle against the financial and
economic crisis, but there is a long way to go. Now more than ever,
America needs a strong, nonpolitical and independent central bank with
the tools to promote financial stability and to help steer our economy
to recovery without inflation.

Here are a few choice quotes from Ben Bernanke’s
op-ed piece with my replies:

Ben
Bernanke:”These
measures are very much out of step with the global consensus on the appropriate
role of central banks, and they would seriously impair the prospects for
economic and financial stability in the United States.”

Jet
Lacey:”Fuck you
Ben.The global consensus?Do you mean the consensus of the banking and
corporate oligarchs that plan to create a worldwide scientific dictatorship
based on eugenics? That’s exactly whywe need such a measure in the first place;
to lop off the head of the beast that’s devouring us.”

Ben
Bernanke:”The Fed
played a major part in arresting the crisis, and we should be seeking to
preserve, not degrade, the institution's ability to foster financial stability
and to promote economic recovery without inflation.”

Jet
Lacey:”Fuck you
Ben.The Fed also played a major role in
creating the crisis in order to
bring about the New World Order’s “global consensus.”You know, there are many of us who are
catching on to your ‘problem-reaction-solution’
shenanigans and it just doesn’t work any longer.You boys have cried wolf way too many times
already.”

Ben
Bernanke:”The proposed
measures are…the product of public anger over the financial crisis…particularly
the rescues of some individual financial firms….as distasteful and unfair as
some undoubtedly were -- were unfortunately necessary to prevent a global
economic catastrophe that could have rivaled the Great Depression.”

Jet
Lacey:”Fuck You
Ben.Yyou just described the reaction portion of this entire
situation.And did I mention, fuck you?”

Ben
Bernanke:”we strongly
support measures -- including the development of a special bankruptcy regime for financial firms…while ensuring that the
costs of failure are borne by owners, managers, creditors and the financial
services industry, not by taxpayers.” (emphasis mine)

Jet
Lacey:”Again, fuck
you Ben.Surprise, surprise, surprise!Here comes the solution portion where they set themselves up as the ‘Too-Big-To-Fail’
supranational regulator of the entire economy of the United States in
association with the BIS, the IMF, the World
Bank and a few other Central Banks and ‘Voila!’ you’ve got yourself a
brand-spanking new New World Order.”

(Isn’t it funny when you click on the
links which direct you to the "About" section of all these banks that their charter/mission statements are always to help
avoid crisis, help developing nations, end hunger and starvation, etc.?”Since when do banks set themselves up to help
anyone other than themselves?)